COGS for Membership Fees

Feb 15, 2015
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United Arab Emirates
I am working with a new sports club and I have a question about treatment of Cost of Goods sold as part of the membership fees.

The club has an annual membership which is paid up front. I believe I will need to recognize the revenue on this each month in equal twelfth.

However as part of the membership the club has some costs on a per member basis which I am not sure how to treat.

One of these is a sports kit provided to all members, which is the vast majority of the direct cost of each membership. This is provided upon joining and also a new one is provided when members renew each year.

How do I treat this? As COGS? If so, is the expense recorded in full once the kit is provided? This would make each membership at a loss for a short while until the revenue has caught up.

Or is the cost matched in equal 12ths along with the revenue?

Any help and guidance would be appreciated.



VIP Member
Jan 6, 2013
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United Kingdom
I think the first thing is that clubs and associations don't have a COGS sold because their primary activity is not for selling anything. Instead they have an income & expenditure statement. So membership fees will form part of income and purchase of kits will be an expense.

Obviously if the club has other secondary activities such as a shop, bar/cafe, then profits/losses from those will need their own little trading accounts to work out the profit/loss on them, which is then brought into the main income/expenditure statement.

The kits would be expensed in the month that you buy them, so yes, you could potentially be running a deficit earlier in the year if membership fees are the only source of income.

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